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I went to an expensive private liberal arts college with almost a full ride but part of my financial aid package was approximately $4,000 in loans a year.

I was miserable at this place and dropped out my last year when I realized I wasn't going to be able to graduate on time and I didn't have the money to pay for an extra semester.

I left without ever getting a degree.

I went back to my country and eventually graduated from a cheap local university. Fast forward 6 years later, I'm getting an email from a collection agency saying I owe them $32,000!! My principal was $12,000 with an 8% interest rate. I don't really understand how this number was calculated.

In my contract it said the interests would not accrue if I was enrolled full-time as a student but apart from the time I requested a transcript so I could apply to the other school, I haven't officially told them I was a student somewhere else.

I just started work for an American company in my country right now and would have to go to America for business trips often.

I understand I owe the money and I'm not proud to have to ask this question. I don't have savings and I only make $600 a month and not a US salary despite it being an American company.

My questions are:

  • What are the consequences if I ignore the emails?
  • I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America?
  • How would this affect me if I visit America often? Does this mean I would not ever be able to live in America?
  • Will they know when I come to America and arrest me at the border or can they take away my passport?

Thank you.

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    Do you owe the money? If so you should pay it, otherwise it is stealing. Perhaps you can negotiate the amount to pay down, but you should still pay the loan. – Pete B. Oct 27 '16 at 12:46
  • On the question of how $32,000 was calculated as what you owe they have probably charged you for non-payment and added interest to the unpaid non-payment charges! – MD-Tech Oct 27 '16 at 14:15
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    @PeteB. since when is defaulting on a loan, stealing? – mathemagician Oct 27 '16 at 16:41
  • @mathemagician Does "committing theft" work better for you? Bottom line, when you sign, you contract to pay the loan. Bottom line, it's a matter of ethics. – Xalorous Oct 27 '16 at 22:22
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    @Xalorous Last I checked for stealing or "committing theft" you go to jail. Do you go to jail for unpaid debt? – mathemagician Oct 27 '16 at 22:27
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What are the consequences if I ignore the emails?

If you ignore the emails they will try harder to collect the money from you until they give up. Unlike what some other people here say, defaulting on a loan is NOT a crime and is NOT the same as stealing. There is a large number of reasons that can make someone unable to pay off a loan. Lenders are aware of the risk associated with default; they will try to collect the debt but at the end of the day if you don't have money/assets there is not much they can do.

As far as immigration goes, there is nothing on a DS-160 form that asks you about bankruptcies or unpaid obligations. I doubt the consular officer will know of this situation, but it is possible. It is not grounds for visa ineligibility however, so you will be fine if everything else is fine. The only scenario in which unpaid student loans can come up relevant in immigration to the US is if and when you apply for US Citizenship. One of the requirements for Citizenship is having good moral character. Having a large amount of unpaid debt constitutes evidence of a poor moral character. But it is very unlikely you'd be denied Citizenship on grounds of that alone.

I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America?

Yes, they probably already have.

How would this affect me if I visit America often? Does this mean I would not ever be able to live in America?

No. See above. You will have a hard time borrowing again.

Will they know when I come to America and arrest me at the border or can they take away my passport?

No. Unpaid debt is no grounds for inadmissibility, so even if the CBP agent knows of it he will not do anything. And again, unpaid debt is not a crime so you will not be arrested.

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You signed a contract to pay the loan. You owe the money.

Stories of people being arrested over defaulted student loans are usually based in contempt of court warrants when the person failed to appear in court when the collection agency filed suit against them.

Explore student loan forgiveness program.

Research collections and bankruptcy and how to deal with collection agencies. There are pitfalls in communicating with them which restart the clock on bad debt aging off the credit report, and which can be used to say that you agreed to pay a debt. For instance, if you make any sort of payment on any debt, a case can be made that you have assumed the debt. Once you are aware of the pitfalls, contact the collection agency (in writing) and dispute the debt. Force them to prove that it is your debt. Force them to prove that they have the right to collect it. Force them to prove the amount. Dispute the fairness of the amount.

Doubling your principal in 6 years is a bit flagrant.

So, work with the collectors, establish that the debt is valid and negotiate a settlement. Or let it stay in default.

Your credit report in the US is shot. It will be a long time before the default ages off your report. This is important if you try to open a bank account, rent an apartment, or get a job in the US. These activities do not always require a credit report, but they often do. You will not be able to borrow money or establish a credit card in the US.

Here's a decent informational site regarding what they can do to collect the loan. Pay special attention to Administrative Wage Garnishment. They can likely hit you with that one. You might be unreachable for a court summons, but AWG only requires that the collectors be able to confirm that you work for a company that is subject to US laws.

Update: I am informed that federally funded student loans are not available to international students. AWG is only possible for debts to the federal government. Private companies must go through the courts to force settlement of debt. OP is safe from AWG.

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What are the consequences if I ignore the emails?

That would depend on how much efforts the collection agency is ready to put in.

I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America?

Possibly yes, they may already be doing it.

Will they know when I come to America and arrest me at the border or can they take away my passport?

For this, they would have to file a civil case in the court and get an injunction to arrest you. Edit: Generally it is unlikely that the court may grant an arrest warrant, unless in specific cases. A lawyer advise would be more appropriate. End Edits

It is possible that the visa would also get rejected as you would have to declare previous visits and credit history is not good.

  • "For this, they would have to file a civil case in the court and get an injunction to arrest you." I guess that is true in some sense, but vacuous: I don't believe any court would issue an arrest order over an unpaid debt. Do you have reason to think they might? – Nate Eldredge Oct 27 '16 at 18:17
  • @NateEldredge If it was federally funded student loan, they might just do it. – Xalorous Oct 27 '16 at 22:24
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    @Xalorous: If you're being serious, please provide evidence that this has actually happened or is likely. If you're joking, I think that is unhelpful and going to further confuse and alarm the OP. – Nate Eldredge Oct 27 '16 at 22:38
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    @Xalorous: That link says nothing about arrests. The reference to "crimes being prosecuted" is in contrast to the situation with loans; it doesn't claim that nonpayment of a loan is a crime. Also, the distinction between "arrested for failure to appear in court" versus "arrested for failure to repay loan" is crucial and IMHO they should not be conflated. – Nate Eldredge Oct 27 '16 at 22:54
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    @NateEldredge the issue is whether he can be arrested at a border crossing. Bench warrant for contempt of court might result in this. The link shows the many resources collectors have outside of court. And it does state that the government has gone to court. Administrative Wage Garnishment is no joke. You get a letter. Your company gets a letter. Your check is reduced by 15% of your after tax income. And as long as they do the math right, you have no recourse. Collectors no longer even need to worry about trying to settle, because they have you. – Xalorous Oct 27 '16 at 23:00

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